The euro gained on other major currencies on Wednesday in New York as investors trended toward the higher-yielding currency with stocks on the rebound. The single currency moved away from recently-seen near-term lows against the dollar, sterling and yen.
The euro climbed above a near-term trading range against the dollar, rising to around 1.3020 in mid-day trading. The euro fell to a 5 1/2-week low of 1.2887 earlier in the week.
Treasury Secretary Timothy Geithner hinted Wednesday that policymakers may be forced to alter their recovery strategies as the global financial crisis drags on.
Speaking before the Economics Club of Washington, Geithner explained that the revised estimate from the International Monetary Fund for global growth could spark a change in policy.
The euro also rebounded against the sterling, climbing to an eight-day high of 0.8987. The single currency had hit a 2 1/2 month low of 0.8785 last week.
UK's Chancellor of Exchequer Alistair Darling said he now sees a contraction of 3.5% in 2009, the worst since World War II. He expects the economy to resume growth by the end of this year and grow 1.25% next year.
The euro reached a two-day high of 128.11 versus the Japanese yen, erasing early losses. The single currency had hit a 5 1/2-week low of 126.08 earlier in the week.
The yen had gained across the board earlier as the Japanese Ministry of Finance posted a merchandise trade surplus of 11 billion yen in March. Analysts called for a 10 billion yen surplus following the revised 82.1 billion yen surplus in February.
In economic news from the Eurozone, a group of leading German economic think tanks lowered its forecast for the country's economy to contract 6% in 2009 from 2.25% fall estimated previously, reports said Wednesday citing sources related with the institutes.
The group will be presenting their forecast officially on Thursday, in which it reportedly said unemployment in Germany will rise to an average of 3.7 million this year and to 4.7 million in the next year.
Also, the International Monetary Fund said today that the German economy is expected to contract 5.6% in 2009 and 1%.
The collective deficit of the 27-nation European Union grew to 2.3% of GDP from 0.8%, reflecting a gap of 5.5% in the UK. The budget deficit for the euro area rose to 1.9% of GDP in 2008, compared with 0.6% in the previous year, with Ireland recording the highest deficit.
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